Two weeks have passed since Balendra Shah became a powerful prime minister in Nepal’s recent political history. His rise to power follows the landslide victory of the Rastriya Swatantra Party (RSP) in the March 5 elections. His swearing-in marked a major generational shift in Nepal’s power politics, as the political parties and leaders who had long dominated national politics were sidelined.

The new and strong government under Balen has signaled an assertive and unconventional governing style. Marked by a strong anti-corruption stance and institutional interventions, the administration appears intent on reshaping political norms. However, questions remain about its economic priorities, particularly its limited response to rising energy costs and inflation. Here is a preliminary analysis of Balen’s two weeks in office.

Implementation of probe panel

On the very first day in office, the Balen administration promptly decided to implement the report submitted by a probe panel formed to investigate the violence and killings that occurred on Sept 8–9 last year. The next day, former Prime Minister KP Sharma Oli and former Home Minister Ramesh Lekhak were arrested, sending a strong political message.

The arrests drew criticism on the grounds that due process was not followed, as they were carried out during odd hours and on a holiday. In response, the Communist Party of Nepal (Unified Marxist–Leninist) launched street protests, while the position of the Nepali Congress remained unclear and ambiguous.

Although both leaders were later released by the court, the move underscored the government’s willingness to challenge powerful figures. Despite their release following a Supreme Court order, police have continued investigations against them and plan to file cases in court.

Similarly, the government briefly arrested the then Chief District Officer of Kathmandu, but he was immediately released following pressure from the bureaucracy. The commission has also recommended action against high-profile individuals from the bureaucracy, Nepali Army, and Nepal Police. The government has decided to conduct further studies before taking action against individuals from these agencies.

Improving governance service delivery

Governance reform remains the top priority of the Balen-led administration. Shah has instructed government secretaries to avoid delays and expedite their work. In a strong message, he reportedly told government staff to either perform or step down.

At the same time, he has instructed that government services should not be interrupted even during lunchtime, with appropriate staff management. The administration has also begun dismantling entrenched bureaucratic practices, notably by removing intermediaries from land and transport offices—sectors long criticized for inefficiency and corruption.

On the governance front, the cabinet has moved to streamline the state apparatus by reducing the number of ministries from 24 to 17. The government has also taken proactive steps to deploy bureaucrats at the local level in an effort to improve service delivery. It is closely monitoring key government offices responsible for providing prompt services to citizens.

However, under the current federal structure, the federal prime minister cannot dictate the functioning of provincial and local governments. Some chief ministers and local government leaders have already objected to the instructions of Prime Minister Shah.

Corruption control

The Balen-led government has prioritized tackling money laundering and corruption. As Nepal faces pressure to take tangible steps to be removed from the Financial Action Task Force gray list, the new government has initiated investigations into money laundering cases.

Authorities have arrested a notorious middleman, Deepak Bhatta, on money laundering charges. Similarly, Nepal Police has issued an arrest warrant against former Prime Minister Sher Bahadur Deuba and his family members in connection with such cases. Police have also arrested former minister Deepak Bhatta on similar charges.

The government has emphasized corruption control. The first cabinet meeting decided to establish a commission to investigate the wealth of public officials dating back to the 1990s. In the first phase, the cabinet formed a commission to investigate the properties of public service holders from 2006 to 2026. 

While the government cannot interfere with the functioning of the Commission for the Investigation of Abuse of Authority, an autonomous constitutional body, it is coordinating with the CIAA to expedite corruption investigations. At the same time, the arrest of some businessmen has created fear in the private sector, and it is feared that it could spoil the investment climate.

Constitutional amendment

The Balen-led administration has placed strong emphasis on constitutional amendment, a key pledge made by the RSP during the election campaign. Balen Shah has formed a committee led by his political advisor, Ashim Shah, to work with political parties to prepare a base document for nationwide deliberations on constitutional amendments.

However, major political parties have not fully cooperated with the government. The Nepali Congress, for instance, has yet to send its representative to the task force. Although constitutional amendment remains a common priority among political parties, there are significant differences regarding its content.

Despite the government’s efforts, progress on constitutional amendment is unlikely in the near future due to the lack of cooperation from traditional political parties. However, the ruling RSP can initiate amendment proposals independently, as it holds a two-thirds majority in Parliament. Support from the Shram Sanskriti Party, led by Harka Sampang, is sufficient to pass amendments. Key issues include the form of governance and the electoral system.

Investigation into Sept 9 violence

Following the Sept 8–9 GenZ movement, a high-level commission led by Gauri Bahadur Karki was formed to investigate the violence. However, the Karki-led panel focused only on the events of Sept 8, drawing criticism from political parties and civil society for its selective approach.

To address this concern, the Balen-led government decided to form a separate commission to investigate the Sept 9 violence. On that day, protests targeted vital state institutions such as Singha Durbar, the Supreme Court, the President’s Office, and various business establishments. However, even after two weeks in office, the government has yet to form this commission.

Rare public speech by PM

After becoming prime minister, Balendra Shah has not delivered a public speech. It was expected that the prime minister would address the nation through television after assuming office, but he did not. Similarly, there is a tradition of the prime minister speaking in Parliament, which he has avoided.

There are reports that the prime minister addressed a function organized by the Nepali Army. He also briefly addressed the international community regarding the foreign policy priorities of the new government. Prime Minister Balen is under scrutiny for bypassing Parliament. In the past, political leaders used to engage with the media and address Parliament regularly. However, the prime minister is consulting with ministers and lawmakers.

Conflict of interest: a key priority

For traditional political parties, conflict of interest was not a priority issue. However, for the Balen-led cabinet, it is a serious concern. Rastriya Swatantra Party Chairperson Rabi Lamichhane has issued a strong warning to ministers and lawmakers not to appoint their family members and relatives to government offices or their secretariats.

Prime Minister Balendra Shah removed Minister for Labor, Employment and Social Security, Deepak Kumar Sah, for misusing his office to appoint family members. The minister was sacked just 13 days into office. In the past, politicians and ministers faced criticism for appointing their relatives to government positions.

Recovering the economy: A herculean task

Economic recovery remains a key challenge for the Balen-led administration. The Asian Development Bank has projected that economic growth will slow significantly to 2.7 percent in fiscal year 2026, amid prolonged political uncertainty following civil unrest in early September and the ongoing conflict in the Middle East.

While a stable government could contribute to economic growth, the Middle East conflict poses risks through higher oil prices, reduced tourist arrivals, and potential disruptions in remittance flows. If the conflict continues, it could also affect fertilizer supplies, thereby impacting agricultural output.

According to the ADB, agricultural growth is projected to slow from 3.3 percent in 2025 to 2.7 percent in 2026, as paddy output is expected to decline by 4.2 percent due to delayed monsoon rains and the Oct 2025 floods. The conflict in the Middle East may also negatively affect the tourism industry, including the spring mountain season.

No major departure in foreign policy

The Balen administration has signaled that there will be no major shift in foreign policy. While addressing the 9th Indian Ocean Conference, Foreign Minister Shisir Khanal stated that Nepal’s foreign policy remains firmly grounded in the UN Charter, the principles of Panchasheel, and non-alignment.

Two weeks after the formation of the government, Prime Minister Balen briefed the diplomatic community in Kathmandu about the administration’s priorities. The government has indicated that it will focus more on internal issues than foreign policy, emphasizing engagement with major powers primarily on economic terms. This approach may help Nepal avoid being drawn into great-power rivalries.

Prime Minister Balendra Shah has received an invitation from Indian Prime Minister Narendra Modi for a bilateral visit. Both sides have tentatively agreed to conduct the high-level visit after the necessary preparations.